CRFB April 2018 Budget Outlook

1. CRFB.org

2. CRFB.org
Trillion Dollar Deficits Return By 2020
Source: CBO April 2018 Baseline
$413 billion
$1.4 trillion
$665 billion
$1.0 trillion
$1.5 trillion
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
Billions
2

3. CRFB.org
40%
50%
60%
70%
80%
90%
100%
110%
2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
Debt Held by the Public
Percent of GDP
Source: CRFB calculations based on Congressional Budget Office data.
105%
96%
3
50-Year Average Debt=41%

4. CRFB.org
Debt Will Grow Significantly Over the Long Term
Percent of GDP
Source: Congressional Budget Office, CRFB calculations
150%
192%
148%
0%
50%
100%
150%
200%
250%
2008 2013 2018 2023 2028 2033 2038 2043 2048
Alternative Fiscal
Scenario
Current Law Estimate
4
50-Year Average Debt=41%

5. CRFB.org
8%
12%
16%
20%
24%
28%
2000 2004 2008 2012 2016 2020 2024 2028
Projected
The Gap Between Revenue and Spending Will Grow
Percent of GDP
Spending
Revenue
Alternative Revenue
Alternative Spending
Source: CRFB calculations based on Congressional Budget Office data.
5

6. CRFB.org
Interest Spending Will Approach $1 Trillion
Source: CRFB calculations based on Congressional Budget Office data.
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Current Law Alternative Fiscal Scenario
Billions
$915
$817
$774
$570
$702
$316
$263
$992
$864
$739
$643
$485
$390
6

7. CRFB.org
What’s Driving Higher Deficits?
7

8. CRFB.org
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2017 Tax Bill
Deficit Absent
Recent Legislation
Other Legislation
$440 billion
$540 billion
FY2019 Deficit
55% of Next Year’s Deficit is Due to Recent Legislation
Source: CBO, CRFB Calculations
Billions
2018
Budget Agreement
2015 Doc Fix &
Extenders
$981 billion
8

9. CRFB.org
Tax Law Costs, After Dynamic Scoring
Billions
Source: Congressional Budget Office.
Includes economic effects of the tax bill and debt service. Costs could be greater if other business tax
increases scheduled in the law are prevented from occurring. Includes all expiring tax provisions in CBO’s
Alternative Fiscal Scenario, even though some were extended one or two months after passage of the tax bill.
$165
$233
$295
$319 $308 $298 $286 $283
$259
$321
$365
-$50
$0
$50
$100
$150
$200
$250
$300
$350
$400
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
2017 Tax Law Extend Expiring Tax Provisions
9

10. CRFB.org
Annual Growth Rate Change from the Tax Bill
10
Average Annual Growth Rate Boost
Estimating Organization In 1st Year Over 10 Years
Congressional Budget Office 0.3 0.06
Joint Committee on Taxation -- <0.02
Moody's Analytics 0.4 0.04
Macroeconomic Advisors 0.1 0.02
Tax Policy Center* 0.8 -0.00
International Monetary Fund 0.3 -0.01
Goldman Sachs 0.3 0.07
Tax Foundation 0.4 0.29
Penn Wharton Budget Model -- 0.06-0.11
Claim-“For the bill to pay for itself” 0.4 0.4
Source: Congressional Budget Office and the listed organizations.
*Tax Policy Center numbers are given for fiscal years; other organizations are calendar year.

11. CRFB.org
Billions
$1,043
$988
$1,012 $1,014
$1,067 $1,070
$1,208
$1,244
$800
$900
$1,000
$1,100
$1,200
$1,300
2012 2013 2014 2015 2016 2017 2018 2019
March 2011 Baseline
BCA Caps
Sequester-Level Caps
The BBA Busted the Original BCA Caps, Gave Both
Sides More than They Asked For
Source: CRFB calculations based on Congressional Budget Office data.
11

12. CRFB.org
The Omnibus Spread The Money Around
12

13. CRFB.org
Social Security, Health Care, And Interest
Explain 82% of Spending Growth
2018-2028 Spending Growth
Source: CRFB calculations based on Congressional Budget Office data.
Numbers may not add due to rounding
Net Interest
21%
Social Security
27%
Medicare
23%
Medicaid/ACA/CHIP
10%
Other Mandatory
7%
Defense
5%
Non-Defense Discretionary
6%
13

14. CRFB.org
0%
50%
100%
150%
200%
250%
300%
Revenue Discretionary Other Mandatory Social Security Health Care Interest
Current Law Alternative Fiscal Scenario
+34%
+55%
+33%
+89%
+96%
+248%
+278%
+66%
Long-Term Deficits Are Still Rising Mainly Due to Health,
Retirement, and Interest Spending
Inflation based on personal consumption expenditures (PCE) index
Source: CRFB calculations based on Congressional Budget Office data.
Nominal Spending Growth 2017-2028
+46% GDP: 55%
Inflation:
25%
14

15. CRFB.org
Trillions over 10 years
Note: Includes interest savings. For balancing the budget by 2028, non-interest savings are assumed to follow
the same path as the FY 2018 House budget but delayed one year. Total savings required to balance the budget
in 2028 could be higher or lower depending on the particular deficit reduction path.
Source: CRFB calculations based on CBO and House Budget Committee data.
Deficit Reduction Needed to Meet Fiscal Goals
$5.4
~$7
$8.0
~$10
$0
$2
$4
$6
$8
$10
$12
Stabilize the Debt at 2018 Level Balance the Budget by 2028
Current Law Alternative Fiscal Scenario
15